How to Price Hosting Plans as a Reseller (Real Margin Examples)

Pricing a hosting plan is arithmetic first and judgement second. Most new resellers do it the other way round. This post works through the arithmetic with real plan prices, so you can swap in your own. If the model itself is new to you, start with how reseller hosting works.

All figures use our reseller plans: US dollars, VAT included, annual billing priced at ten months.

Step 1: your cost per account

Divide the plan price by the accounts you have filled, not by the accounts you are allowed.

The right-hand column is the one that matters in your first year. A bigger plan has a lower cost per account only when it is full. With ten customers, Partner Pro costs you nearly three times as much per account as Partner Start.

Billing software is the second fixed cost. A WHMCS Starter licence, good for up to 250 clients, is a $13.90 a month add-on, and is included on Partner Pro when that plan is paid annually.

Step 2: annual versus monthly, on your side

Over twelve months, with WHMCS in every row:

($166.80 is twelve months of the licence add-on at $13.90.)

Look at the bottom two figures in the right-hand column. Partner Grow on annual billing with the licence added is $436.70. Partner Pro on annual billing with the licence included is $449.90. For $13.20 more a year you get 50 accounts instead of 25 and twice the storage and traffic.

Tip: if you already know you want WHMCS and can pay a year up front, annual Partner Pro is the cheapest way to hold more than ten accounts. If you are still testing demand, pay monthly on Partner Start.

One line of small print: a WHMCS licence is a third-party cost that cannot be returned, so if you use the 30-day money-back guarantee after one was issued, $14.99 is deducted from the refund.

Step 3: break-even customers

Break-even is fixed cost divided by price, rounded up.

Check one by hand: $40.89 ÷ $8 = 5.11, so five customers leave you $0.89 short and the sixth puts you in profit.

At $5 a month on Partner Start you need six of your ten accounts sold before you earn anything. More than half your capacity goes to paying for the capacity.

Step 4: a full worked example

Partner Grow with the WHMCS add-on, all 25 accounts sold across three products. Payment fees are an assumption here: gateways generally charge a percentage plus a fixed amount per transaction, and this table uses 3% + $0.30 as a stand-in. Check your own gateway's price list and replace it.

Half full, with 12 customers (6 Starter, 5 Business, 1 Plus), revenue is $90, fees are $2.70 + $3.60 = $6.30, and the margin is $90 − $40.89 − $6.30 = $42.81, or 48%.

Step 5: put your time in

Now the line most pricing tables leave out. Say each customer takes ten minutes a month on average: a password reset, a mail client setup, a question about an invoice.

25 customers × 10 minutes = 250 minutes, about 4.2 hours. At $30 an hour that is $125. The $140.76 margin becomes $15.76.

Reprice the same three products at $8, $14 and $25:

The hosting cost did not move. What changed is whether the price pays for support.

Tip: differentiate products by what you do, not by gigabytes. Disk limits cost you almost nothing to raise. A monthly WordPress update, a faster reply or a restore on request are what the higher tier is for.

Annual billing for your customers

Offer the same deal you buy on: twelve months for the price of ten. On the $14 Business product that is $140 a year. With the same fee assumption:

You earn $23.86 less per customer per year on annual billing. What you get for it is cash up front, eleven fewer chances for a card to fail, and a customer who reconsiders once a year instead of every month. Four customers paying $140 annually is $560, which covers the $449.90 for annual Partner Pro in one go.

In WHMCS, each product's Pricing tab has a field per billing cycle; set Monthly and Annually and disable the cycles you do not offer by entering -1.00. The details are in WHMCS products, pricing and configurable options.

Check the real numbers every month

Once WHMCS is running (the setup is in starting a hosting business with WHMCS and DirectAdmin), your actual figures are one query away in the WHMCS database:

SELECT billingcycle, COUNT(*) AS services, SUM(amount) AS billed
FROM tblhosting
WHERE domainstatus = 'Active'
GROUP BY billingcycle;

Divide the Annually row by 12, add the Monthly row, and you have monthly recurring revenue to put against the fixed cost from step 1.

Tip: check the pool as well as the revenue. Overselling is allowed, so 3 GB limits for 25 customers on a 30 GB plan (75 GB allocated) works only while real usage stays low.

Two costs people forget

• Free migrations with no limit. Moving a site takes time. If your provider offers free migration into the platform, use it; otherwise include one site and quote for the rest.
• Forgetting tax. The plan prices above include VAT. Whether you charge it on your own sales depends on where you and your customers are, so ask an accountant before publishing prices.

Set the price so that a half-full plan still pays you for the hours.